Freenet AG: freenet increases its subscriber base, EBITDA and free cash flow in the first quarter of 2022? Guidance 2022 reiterated


DGAP-News: freenet AG / Key word(s): Quarterly / Interim statement/Quarterly results

freenet AG: freenet increases its subscriber base, EBITDA and free cash flow in the first quarter of 2022? Guidance 2022 reiterated

12.05.2022 / 18:00
The issuer is solely responsible for the content of this announcement.

freenet increases its subscriber base, EBITDA and free cash flow in the first quarter of 2022? Guidance 2022 reiterated

  • Stable turnover? a higher share of service revenue improves quality
  • Profitability increases in all segments compared to the prior year quarter
  • EBITDA up 8.4% to €118.0 million compared to the prior year quarter
  • Positive free cash flow trend (+5.5% compared to Q1/21)
  • Subscriber base grows to over 8.8 million
  • Guidance for the 2022 financial year reiterated

Budelsdorf, May 12, 2022? freenet AG [ISIN DE000A0Z2ZZ5] today announced its results for the first three months of fiscal 2022.

Improved profitability with stable revenues in the first quarter of 2022

Freenet continued to demonstrate the viability, crisis resilience and predictability of its business model in early 2022, posting growth across nearly all key performance indicators and increasing overall profitability despite the ongoing pandemic, new regulations ( EECC) and the Ukrainian crisis. The fact that the demand for freenet products and services is impervious to crisis situations and that its value creation is based on long-term subscriptions is crucial for the resilience of the economic model.

In millions of euros/as indicated Q1/22 Q1/21 Switch
Revenue 616.8 619.2 -2.3
EBITDA 118.0 108.8 9.2
Free movement of capital 62.7 59.5 3.3
Subscriber base (in thousands of euros)1 8,811.1 8,647.6 163.5

At €616.8 million, revenue evolved as expected between January and March 2022 compared to the quarter of the previous year (619.2 million euros). This stable performance is explained by a steady growth in the number of the subscribers1, which rose to 8,811.1 thousand in the first three months of the current year (end of 2021: 8,785.1 thousand). Besides, Postpaid ARPU remained largely unchanged? accordingly the relevant price structure? compared to the quarter of the previous year at 17.7 euros (quarter of the previous year: 17.8 euros). With stable consolidated revenues, the higher share of services revenues (SR) leads to a further improvement in the quality of revenues, which is also reflected in the evolution of EBITDA.

Mobile Communications
In millions of euros/as indicated Q1/22 Q1/21 Switch
Revenue 544.6 548.7 -4.1
of which SR, postpaid 381.4 378.9 2.6
including SR, no frills/prepaid 27.8 26.5 1.3
EBITDA 96.8 91.7 5.0
High-value mobile customers (in thousands of euros) 7,281.2 7,167.7 113.5
of which postpaid customers 7,182.8 7,099.4 83.4
including app-based clients2 98.4 68.3 30.2
Postpaid ARPU (in EUR) 17.7 17.8 -0.1

The 4.4 million euro increase in turnover in TV and media sector to EUR 73.9 million compensated for the marginal decline of EUR 4.1 million in Mobile Communications segment revenue to EUR 544.6 million (prior year quarter: EUR 548.7 million euros). The increase in TV and Media segment revenue was mainly driven by strong growth in the number of subscribers, which increased from 46.5,000 to 769.0,000 (end 2021: 722.5,000) , as well as higher advertising revenue at EXARING. The increase in subscribers also exceeded the drop in freenet TV (RGU) subscribers from 35.6 thousand to 761.0 thousand (end of 2021: 796.6 thousand). As a result, recorded its best start to the year since its market launch in 2016.

Television and media
In millions of euros/as indicated Q1/22 Q1/21 Switch
Revenue 73.9 69.5 4.4
EBITDA 25.3 22.0 3.3 subscribers (in thousands of euros) 769.0 611.7 157.3
Freenet TV subscribers (RGU) (in thousands of euros) 761.0 868.3 -107.3

The income in the Mobile communications sector decreased, primarily due to reduced sales of low-margin hardware. In contrast, service revenues in this segment increased by €3.9 million to €409.3 million (prior year quarter: €405.4 million) to represent 75.1% segment revenue (prior year quarter: 73.9%). This is explained by the stable ARPU and the growth in the number of postpaid customers relevant for stable revenues in the mobile communications segment to 7,182.8 thousand (end of 2021: 7,178.0 thousand). The number of customers on app-based tariffs2 also increased to reach 98.4 thousand at the end of March 2022 (end of 2021: 88.0 thousand).

Improved profitability in all segments

Profitability? based on EBITDA and free cash flow? improved in line with expectations in the first quarter of 2022. EBITDA increased significantly by 8.4%, from 108.8 million euros in the first quarter of 2021 to 118.0 million euros in the quarter under review. This improvement in profitability was driven by increases in EBITDA in all segments and is mainly attributable to a strong operational performance in these segments as well as a sustainable optimization of overheads within the group. Free movement of capital increased by 5.5% from €59.5 million in the prior year quarter to €62.7 million in the first quarter of 2022. For the first time, this included a dividend payment of 5 .5 million euros from the stake in CECONOMY AG.

Amortization of the mobilcom-debitel brand

In January 2022, freenet started amortizing the main brand mobilcom-debitel on a straight-line basis over a period of 18 months. This development was triggered by the strengthening of the freenet umbrella brand as part of an overall brand transformation. In total, an intangible asset totaling €293.2 million will be amortized by the end of the first half of 2023.

Image: Reconciliation of EBITDA to adjusted consolidated income (in millions of euros)

This resulted in an amortization of 47.0 million euros during the first quarter of 2022, which, less the corresponding deferred tax income, had a negative impact of 40.2 million euros on the consolidated result. To improve comparability with prior year quarters, Freenet will publish adjusted earnings measures3 for the next quarters. Ultimately, Freenet generated an adjusted consolidated profit of €62.8 million in the first three months of 2022 (prior year quarter: €49.8 million). As a result, adjusted earnings per share increased to 0.53 euro (prior year quarter: 0.40 euro).

Guidance 2022 reiterated

Due to good quarterly results and still positive expectations for the whole of 2022, the Management Board confirms its orientations for the current financial year. According to these forecasts, the Management Board expects EBITDA to rise between 450 and 470 million euros and free cash flow to increase between 230 and 250 million euros. The medium-term financial ambitions presented during the Capital Markets Day in November 2021 with the objective of increasing EBITDA to at least €520 million and increasing free cash flow to more than €260 million by the 2025 financial year also continue to apply.

Webcast of the conference call

On Friday, May 13, 2022 at 10:00 a.m. (CET), freenet will hold the first quarter 2022 earnings call. All interested parties can attend the conference call via webcast (listen-only mode).

A recording will be available after the event.

1 Total postpaid subscribers, freenet FUNK, freenet FLEX, and freenet TV (RGU). All customer figures are
indicated on the respective closing date.
2 freenet FUNK and freenet FLEX customers
3 Adjusted for the effects of the amortization of the mobilcom-debitel brand

To note
In the interest of a clear and transparent presentation, alternative performance measures (APM) are used in the financial statements of freenet AG and in ad hoc publications in accordance with Art. 17 MAR, in addition to information defined by International Financial Reporting Standards (IFRS). Information on the use, definition and calculation of APMs can be found in the 2021 annual report of freenet AG starting on page 38.

freenet AG
Investor Relations & ESG
Telephone: +49 (0)40/ 513 06 778
Email: [email protected]

12.05.2022 Broadcast of a Corporate News, transmitted by the DGAP – a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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